2012 international trade law review 


March 2013

International Trade Law Bulletin

This trade law review highlights some of 2012's most significant trade law developments across a variety of areas.

anti-corruption - How does the US corruption legislation apply to you and your Canadian company? (November 2012)

Canadian companies doing business internationally usually understand that they need to comply with Canada's Corruption of Foreign Public Officials Act. The fact that the United States' Foreign Corrupt Practices Act ("FCPA") is often also applicable to them is less understood. This is problematic given the intensity of the FCPA enforcement activities and the very great costs involved where non-compliance is discovered.  read more

customs - The masked ball is over or just beginning? CBSA reverses position on customs duties on masks and costumes (October 2012)

As a result of the Canadian International Trade Tribunal ("CITT") decision in Loblaws, the Canada Border Services Agency ("CBSA") has released D-Memorandum D10-14-62 "Tariff Classification of Costumes" (September 21, 2012) addressing the CBSA tariff classification of costumes. The CBSA views have been shaped in a 15-year battle between importers/retailers and Canadian Customs authorities, and will likely continue to cause some uncertainty for importers/retailers in the near future. The memorandum draws a distinction between theatrical and rental costumes on the one hand, which are generally treated like clothing and subject to duty, as opposed to costumes designed to be worn only once, which are usually duty free.  read more

- "Show Me the Money... Your Majesty" (October 2012)

The Canadian government provides many opportunities for importers to receive refunds of customs duties previously paid. It is good business practice for importers to be aware of these opportunities. We have found that the level of awareness could be improved, particularly in the areas of drawback and the refund of duties.  read more

government procurement
- Leniency applicants now debarred from federal procurement (November 2012)

Canadian newspapers have been replete with headlines involving allegations of corruption and conflict-of-interest in the handing out of public contracts. It is against this backdrop that Public Works and Government Services Canada ("PWGSC"), the entity charged with the vast majority of federal government public procurements in Canada, has issued a new Policy Notification, which expands the integrity provisions applicable to federal contracts. The key change is to remove an exemption previously available to participants in the Competition Bureau's Leniency Program. In doing so, PWGSC may have undermined one of the most important tools for combating criminal conspiracies and bid-rigging.  read more

international investment
- Canada makes changes to investment Canada regime (December 2012)

On December 7, 2012, Industry Canada released widely anticipated revisions to guidelines on the review of proposed investments by foreign state-owned enterprises (SOEs) under the Investment Canada Act (ICA). At the same time, the Prime Minister provided additional comments about the government's proposed approach in a companion speech and the Minister of Industry approved two significant SOE acquisitions of Canadian businesses in the oil and gas sector: China National Offshore Oil Company (CNOOC) / Nexen Inc. and Petroliam Nasional Berhad (Petronas) / Progress Energy Ltd.  read more

international investment
- Canada to remove foreign ownership restrictions on certain telecommunications providers (March 2012)

On March 14, 2012, Canada's Minister of Industry announced proposed changes to the existing foreign ownership restrictions on Canadian telecommunications service providers and announced certain measures relating to the upcoming auctions for 700 MHz spectrum and 2500 MHz spectrum.

The Telecommunications Act will be amended to lift the foreign ownership restrictions for telecommunications service providers that hold less than a 10-percent share of the total Canadian telecommunications market, based on revenue. These providers will continue to be exempt from such restrictions when their market share grows (other than through acquisition or merger) above 10% of the Canadian market. Existing Canadian ownership restrictions provide that non-Canadians may not own, directly and indirectly, more than 46.7% of the voting securities of a telecommunications carrier and may not otherwise exercise "control in fact " of such carrier through contract or otherwise.  read more

international investment - Canada and China conclude major investment treaty negotiations (February 2012)

During the February 2012 state visit of Canadian Prime Minister Stephen Harper to China, the countries announced completion of negotiations on a Foreign Investment Protection and Promotion Agreement. The Agreement reflects the growing importance of international trade and investment between the two countries.  read more

jurisdictional developments - No connection? no problem! Canada's Competition Bureau flexes its jurisdictional muscles (August 2012)

The Competition Bureau recently concluded its review of a proposed transaction in the aerospace sector, clearing United Technologies Corporation's acquisition of Goodrich Corporation. While the terms of the transaction are not unusual, the clearance is noteworthy in that it demonstrates the Bureau's willingness to scrutinize even those transactions in which the parties do not have any overlapping assets in Canada and where the vast majority of customers are located outside of Canada.  read more 

jurisdictional developments - Restraining the long arm of Ontario courts: Supreme Court of Canada clarifies private international law (April 2012)

On April 18, 2012, the Supreme Court of Canada released a trilogy of decisions (Van Breda v Village Resorts Limited, Éditions Écosociété Inc v Banro Corp and Black v Breeden) in which the Court upheld the assumption of jurisdiction by lower courts over disputes brought in Ontario against foreign defendants. The Supreme Court's restatement of the law has narrowed the test for jurisdiction in a way that should provide foreign businesses with greater predictability regarding when they will need to answer to a court in Ontario or elsewhere in Canada.  read more

trade remedies - The CITT terminates a dumping and subsidizing inquiry at the preliminary injury stage (September 2012)

On September 14, 2012 the CITT terminated the dumping and subsidizing inquiry in Unitized Wall Modules (PI-2012-004) at the preliminary injury inquiry.

At a preliminary injury inquiry, the CITT reviews whether the evidence discloses a reasonable indication that the dumping and subsidizing of subject goods has caused injury or retardation or are threatening to cause injury.

In Unitized Wall Modules, the CITT terminated the inquiry, and found that the complainants had not shown the requisite reasonable indication of injury because:

  • At best, the evidence of injury was one lost sale and one instance of price depression for 2 of 25 domestic producers over three year;
  • The shares of domestic production were unclear and thus the alleged losses could not be determined to constitute harm to a major proportion of the industry;
  • Losses late in the Period of Inquiry did not explain the earlier declining performance of the complainants;
  • The evidence regarding injury from dumping and subsidizing did not disclose a reasonable indication that any injury was material; and
  • There was no cogent evidence of threat of injury.

In October, the complainants launched a judicial review in the Federal Court of Appeal. This judicial review was discontinued in February 2013. On March 4, 2013, the CBSA initiated a new investigation regarding Unitized Wall Modules.  

trade remedies - 2012 federal budget shakes up Canada's trade remedy system (April 2012)

In a surprise move, the federal government announced as part of its 2012 Budget Speech, its intention to introduce legislation to consolidate Canada's trade remedy investigation functions into one organization, the CITT. As the motivation for the move, the Budget identified the need to create efficiencies and cut red tape, making it less cumbersome for Canadian businesses to take action against unfair trade.  read more

by C.J. Michael Flavell, Elisabeth Preston, Martin Masse and Jonathan O'Hara

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013